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Bundling and Licensing of Genes in Agricultural Biotechnology

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  • Guanming Shi

Abstract

We examine the strategic incentive for gene holders to vertically integrate with seed companies and chemical input companies. With homogeneous conventional seeds, we find that a pure bundling strategy (produce the genetically modified seed only) is dominant. When the gene holder and breeder are, respectively, the monopolistic producers of genetically modified and conventional seeds, they may commit to mixed bundling (supply both genetically modified and conventional seed) to deter potential entry to the conventional seed market. A vertical merger may solve the credibility issue of the mixed bundling commitment through third party licensing agreements in the conventional seed market. Copyright 2009, Oxford University Press.

Suggested Citation

  • Guanming Shi, 2009. "Bundling and Licensing of Genes in Agricultural Biotechnology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 264-274.
    • Handle: RePEc:oup:ajagec:v:91:y:2009:i:1:p:264-274
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01174.x
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    Citations

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    Cited by:

    1. Rousselière, Samira & Rousselière, Damien & Ramani, Shyama, 2016. "Innovation Led Alliances: Theory and application to the GM Plant Industry," 149th Seminar, October 27-28, 2016, Rennes, France 244949, European Association of Agricultural Economists.
    2. Guanming Shi & Jean-paul Chavas & Kyle Stiegert, 2010. "An Analysis of the Pricing of Traits in the U.S. Corn Seed Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1324-1338.
    3. Shi, Guanming & Stiegert, Kyle & Chavas, Jean Paul, 2010. "An Analysis of Pricing in Horizontal and Vertical Markets: The Case of the Cottonseed Market," Working Papers 201439, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    4. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Incentives," Working Papers hal-02805961, HAL.
    5. Anderson, Benjamin & Sheldon, Ian M., 2011. "Endogenous R&D Investment and Market Structure: A Case Study of the Agricultural Biotechnology Industry," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 107832, Agricultural and Applied Economics Association.
    6. Nolan, Elizabeth & Santos, Paulo & Shi, Guanming, 2012. "Market concentration and productivity in the United States corn sector: 2002-2009," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125941, Agricultural and Applied Economics Association.
    7. Guanming Shi & Kyle W. Stiegert & Jean P. Chavas, 2011. "An analysis of bundle pricing in horizontal and vertical markets: The case of the U.S. cottonseed market," Agricultural Economics, International Association of Agricultural Economists, vol. 42, pages 77-88, November.
    8. Shi, Guanming & Stiegert, Kyle W. & Chavas, Jean-Paul, 2009. "An Analysis of Pricing in the U.S. Cotton Seed Market," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 51617, Agricultural and Applied Economics Association.
    9. Shi, Guanming & Chavas, Jean-Paul, 2009. "On Pricing and Vertical Organization of Differentiated Products: The Case of Soybean Seed Industry," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49186, Agricultural and Applied Economics Association.
    10. Lemarié Stéphane & Baghdasaryan Delia & Campens Etienne, 2017. "The Product Line Strategy of a Company Selling Seed with a Licensed GM Trait," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 15(1), pages 1-15, January.
    11. Shi, Guanming & Chavas, Jean-Paul, 2009. "On Pricing and Vertical Organization of Differentiated Products," Staff Paper Series 535, University of Wisconsin, Agricultural and Applied Economics.
    12. Samira Rousselière & Shyama V. Ramani & Damien Rousselière, 2021. "The organizational choice of technology transfer mode: Theory and application to the genetically modified plant industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1466-1476, September.
    13. Ma, Xingliang & Shi, Guanming, 2013. "GM vs. Non-GM: A Survival Analysis of U.S. Hybrid Seed Corn," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(3), pages 1-19, December.
    14. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Incentives," Working Papers hal-02805961, HAL.
    15. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition," AMSE Working Papers 1239, Aix-Marseille School of Economics, France.
    16. Shi, Guanming & Chavas, Jean, 2010. "On Pricing and Vertical Organization of Differentiated Products," Working Papers 201438, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.

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